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Medidata Reports Record Full-Year and Fourth Quarter 2017 Results

Medidata
(NASDAQ:MDSO) today announced its financial results for the fourth
quarter and full year 2017 and provided detailed financial guidance for
the full year 2018.

"We had an exceptional year in 2017, driven by strong financial and
operational execution, and the largest increase in total multi-year
subscription backlog in our history," said Tarek Sherif, Medidata's
chairman and chief executive officer. "Medidata's expanding market
opportunity in clinical development is being driven by an explosion of
new potential cures, increasingly complex clinical trials and an
evolving regulatory environment. Our strategy and R&D investments
continue to pay off as we see high demand for our eClinical capabilities
and pioneering analytics, none of which competitors can offer on a
unified platform."

Fourth Quarter 2017 Results

Total revenue for the fourth quarter of 2017 was $141.2 million, an
increase of $16.7 million, or 13%, compared with $124.5 million in the
fourth quarter of 2016. Subscription revenue was $119.8 million, an
increase of $13.8 million, or 13%, compared with the same period last
year. Professional services revenue for the fourth quarter of 2017 was
$21.5 million, an increase of $3.0 million, or 16%, compared with
$18.5 million in the fourth quarter of 2016.

GAAP gross margin for the fourth quarter of 2017 was 76.8%, up 60
basis points compared with 76.2% in the fourth quarter of 2016.

GAAP operating income for the quarter was $16.5 million, compared with
$17.5 million in the fourth quarter of 2016. Non-GAAP operating income2
for the fourth quarter of 2017 increased to $36.6 million, from $31.9
million a year ago.

GAAP operating income margin was 11.7% in the fourth quarter of 2017,
compared with 14.1% in the fourth quarter of 2016. Non-GAAP operating
income margin2 was 25.9% in the fourth quarter of 2017,
compared with 25.7% in the fourth quarter of 2016.

GAAP net income for the fourth quarter of 2017 was $13.8 million, or
$0.23 per diluted share, up 27% compared with $10.8 million, or $0.19
per diluted share, in the fourth quarter of 2016. Adjusted non-GAAP
net income2 for the fourth quarter of 2017 was $24.5
million, or $0.41 per diluted share, up 28% compared with $19.2
million, or $0.33 per diluted share, in the fourth quarter of 2016.
See the non-GAAP reconciliation included in this release for full
details of the non-GAAP adjustments.

Cash flow from operations was $30.2 million in the fourth quarter of
2017, compared with $40.4 million a year ago.

Full-Year 2017 Results

Total revenue for the full-year 2017 was $545.5 million, an increase
of $82.1 million, or 18%, compared with $463.4 million in 2016.
Subscription revenue was $459.5 million, an increase of $65.3 million,
or 17%, over 2016. Professional services revenue for the full-year
2017 was $86.0 million, an increase of $16.9 million, or 24%, compared
with $69.1 million in 2016.

GAAP gross margin for the full-year 2017 was 76.8%, up 110 basis
points compared with 75.7% in 2016.

GAAP operating income3 for the full-year 2017 was $64.3
million, up 28% compared with $50.2 million in 2016. Non-GAAP
operating income2 for the full-year increased to $131.8
million, up 23% compared with $106.7 million a year ago.

GAAP operating income margin was 11.8% in 2017, up 100 basis points
compared with 10.8% in 2016. Non-GAAP operating income margin2
was 24.2% in 2017, up 120 basis points compared with 23.0% in 2016

GAAP net income3 for the full-year 2017 was $44.4 million,
or $0.74 per diluted share, up 53% compared with $29.0 million, or
$0.51 per diluted share, in 2016. Adjusted non-GAAP net income2
for the full-year 2017 was $81.7 million, or $1.37 per diluted share,
up 30% compared with $62.8 million, or $1.10 per diluted share, in
2016. See the non-GAAP reconciliation included in this release for
full details of the non-GAAP adjustments.

Cash flow from operations was $121.7 million for the full-year 2017,
an increase of $32.9 million, or 37%, compared with $88.8 million in
2016.

Total cash, cash equivalents, and marketable securities were $663.3
million at the end of 2017, an increase of $148.1 million, or 29%,
compared with $515.2 million on December 31, 2016.

Additional Highlights:

Adjusted 2018 subscription backlog4 as of December 31, 2017
was $480 million, an increase of $76 million, or 19%, compared with
$404 million a year ago. Adjusted subscription backlog, together with
professional services revenue guidance, provides 90% coverage of total
revenue based on the midpoint of our full-year 2018 total revenue
guidance range.

Total multi-year subscription backlog1 as of December 31,
2017 was $1,036 million, an increase of $291 million, or 39%, compared
with $745 million a year ago.

Revenue retention rate5 remained over 99%.

Medidata launched its new Strategic Monitoring suite, which is the
only industry solution designed to both meet and exceed the newest
European regulations for risk management (ICH E6 (R2)). Six enterprise
customers have implemented the new suite. In addition, TESARO, a
leading oncology biopharmaceutical company selected it in the fourth
quarter.

Medidata is leading the industry with breakthrough, next-generation
data and analytics innovations. In the fourth quarter, the company's
Synthetic Control offering was recognized with a prestigious SCRIP
Award for Best Technological Development in Clinical Trials - Sponsor
Focused, and named the PM360 Innovation Product of the Year for 2017.

"I am pleased with our performance in 2017. We made solid progress in
building scale and operational strength, and achieved a significant
milestone with over $1 billion in total subscription backlog," said
Rouven Bergmann, Medidata's chief financial officer. "We enter 2018 with
good visibility to achieve our targets. We are confident about our
long-term opportunity creating value for our customers and shareholders."

Financial Outlook

For the full-year 2018, the Company now expects:

Total revenue between $624 and $648 million, representing 17%
year-over-year growth6 at the midpoint.

Subscription revenue between $531 and $555 million, representing 19%
growth at the midpoint.

Professional services revenue of approximately $93 million.

GAAP operating income between $63.5 and $73.5 million. Non-GAAP
operating income7, which excludes the impact of
depreciation, amortization of intangible assets, and stock-based
compensation expense, between $157 and $167 million.

GAAP net income between $42 and $50 million. Adjusted non-GAAP net
income7, which excludes the impact of stock-based
compensation, non-cash interest expense associated with convertible
senior notes, and amortization, tax-effected at a 25% rate, between
$98.5 and $106.5 million.

While changes in the stock price could change the fully diluted share
count, Medidata is assuming 61 million fully diluted shares.

The operating and net income measures above reflect Medidata's non-GAAP
financial guidance and the corresponding GAAP equivalents to its
guidance.

Conference Call

The company plans to host its investor conference call today at 8:00
a.m. Eastern time. The investor conference call will be available via
live webcast on the "Investor" section of Medidata's website at http://investor.mdsol.com.
To participate by telephone, domestic participants may dial 877-303-2528
and international participants may dial 847-829-0023. Those interested
in participating in the conference call should dial in at least 10
minutes prior to the call to register. Participants can also join the
call via a simultaneous live audio webcast, which will be made available
on the "Investor" section of Medidata's website at http://investor.mdsol.com.
A replay of the conference call can be accessed until Thursday, February
22, 2018 by dialing 800-585-8367 domestically or 404-537-3406
internationally, with the passcode 3294637. An archive of the call will
also be hosted on the "Investor" section of Medidata's website, http://investor.mdsol.com,
for a limited period of time.

About Medidata

Medidata's unified platform, pioneering analytics, and unrivaled
expertise power the development of new therapies for over 1,000
pharmaceutical companies, biotech, medical device firms, academic
medical centers and contract research organizations around the world.
The Medidata Clinical Cloud® connects patients, physicians and life
sciences professionals. Companies on the Medidata platform are
individually and collaboratively reinventing the way research is done to
create smarter, more precise treatments. For more information: www.mdsol.com

Cautionary Statement

Certain statements made in this press release are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995 that involve significant risks and uncertainties
about Medidata Solutions, Inc. ("Medidata"), including, but not limited
to, statements about Medidata's forecast of financial performance,
products and services, business model, strategy and growth
opportunities, and competitive position. Such statements are subject to
risks and uncertainties that could cause actual performance or results
to differ materially from those expressed in these statements. In
particular, the risks and uncertainties include, among other things,
risks associated with possible fluctuations in our financial and
operating results; errors, interruptions or delays in our service or our
web hosting; integration activities, performance and financial impact of
acquired companies; our ability to continue to release, and gain
customer acceptance of, new and improved versions of our products;
changes in our sales and implementation cycles; competition; our ability
to retain and expand our customer base or increase new business from
those customers; our ability to hire, retain, and motivate our employees
and manage our growth; regulatory developments; litigation; and general
developments in the economy. For additional disclosure regarding these
and other risks faced by Medidata, see disclosures contained in
Medidata's public filings with the Securities and Exchange Commission,
including the "Risk Factors" section of Medidata's Annual Report on Form
10-K for the year ended December 31, 2016. You should consider these
factors in evaluating the forward-looking statements included in this
press release and not place undue reliance on such statements. The
forward-looking statements are made as of the date hereof, and Medidata
undertakes no obligation to update such statements as a result of new
information.

(1) Total multi-year subscription backlog is unadjusted for renewals.

(2) Non-GAAP Financial InformationMedidata provides non-GAAP
operating income, net income, and net income per share applicable to
common stockholders data as additional information for its operating
results. These measures are not in accordance with, or an alternative
for, generally accepted accounting principles and may be different from
non-GAAP measures used by other companies. Non-GAAP operating income
excludes the impact of depreciation, amortization of intangible assets
associated with acquisitions, stock-based compensation expense, wire
transaction recovery, and adjustments to the fair value of contingent
consideration. Adjusted non-GAAP net income excludes the tax-effected
impact of amortization of intangible assets associated with
acquisitions, stock-based compensation expense, non-cash interest
expense, wire transaction recovery, and adjustments to the fair value of
contingent consideration. Management uses these non-GAAP measures to
evaluate its financial results, develop budgets, manage expenditures,
and as an important factor in determining variable compensation. In
addition, investors frequently have requested information from
management regarding depreciation, amortization, and other non-cash
charges, such as share-based compensation, and management believes,
based on discussions with investors, that these non-GAAP measures
enhance investors' ability to assess Medidata's historical and projected
future financial performance. While management believes these non-GAAP
financial measures provide useful supplemental information to investors,
there are limitations associated with the use of non-GAAP financial
measures. One limitation of non-GAAP operating income is that it
excludes depreciation and amortization, which represents the periodic
costs of certain capitalized tangible and intangible assets used in
generating revenues in our business. Medidata compensates for these
limitations by using these non-GAAP financial measures as supplements to
GAAP financial measures and by reviewing the reconciliations of the
non-GAAP financial measures to their most comparable GAAP financial
measures. Investors are encouraged to review the reconciliations of
these non-GAAP financial measures to the comparable GAAP results, which
are attached to this press release.

(3) On September 18, 2014, Medidata discovered that it had been the
subject of a fraud involving the transfer of $4.8 million to an overseas
account. Medidata commenced legal action, alleging that its insurer had
wrongly denied coverage with regard to the loss. On July 21, 2017, the
United States District Court for the Southern District of New York
granted Medidata's motion for summary judgment, and denied the insurer's
motion. In light of this ruling, operating costs and expenses for the
full year ended December 31, 2017 include recognition of the amount that
is probable to be recovered, up to the amount of the originally recorded
loss. Any potential recovery amounts that are in excess of the amount of
the loss, such as interest, have not been recognized.

(5) Revenue retention rate is calculated as the percentage of prior year
revenue attributable to customers retained in the current year.

(6) Growth rates based on 2017 revenue after full retrospective adoption
of Accounting Standards Codification (ASC) 606. Supplemental information
about the anticipated impact of ASC 605 to 606 transition on prior
period results is attached to this press release.

(7) A tabular reconciliation of forward-looking non-GAAP financial
measures to the most comparable forward-looking GAAP measures is
attached to this press release.

MEDIDATA SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in thousands, except per share data)

Three Months Ended December 31,

Twelve Months Ended December 31,

2017

2016

2017

2016

Revenues

Subscription

$

119,756

$

105,981

$

459,528

$

394,269

Professional services

21,461

18,491

86,004

69,112

Total revenues

141,217

124,472

545,532

463,381

Cost of revenues (1)(2)

Subscription

17,958

16,112

69,235

62,136

Professional services

14,747

13,544

57,558

50,473

Total cost of revenues

32,705

29,656

126,793

112,609

Gross profit

108,512

94,816

418,739

350,772

Operating costs and expenses

Research and development (1)

36,536

28,072

138,564

112,595

Sales and marketing (1)(2)

31,952

28,434

126,273

109,290

General and administrative (1)

23,552

20,812

94,324

78,678

Wire transaction recovery (3)

-

-

(4,770

)

-

Total operating costs and expenses

92,040

77,318

354,391

300,563

Operating income

16,472

17,498

64,348

50,209

Interest and other income (expense)

Interest expense

(4,648

)

(4,758

)

(17,765

)

(17,288

)

Interest income

1,687

1,573

5,717

4,382

Other (expense) income, net

(66

)

19

(73

)

11

Total interest and other expense, net

(3,027

)

(3,166

)

(12,121

)

(12,895

)

Income before income taxes

13,445

14,332

52,227

37,314

Provision for income taxes

(323

)

3,492

7,847

8,331

Net income

$

13,768

$

10,840

$

44,380

$

28,983

Earnings per share

Basic

$

0.24

$

0.19

$

0.79

$

0.52

Diluted

$

0.23

$

0.19

$

0.74

$

0.51

Weighted average common shares outstanding

Basic

56,724

55,783

56,473

55,492

Diluted

60,245

57,637

59,765

57,249

(1) Stock-based compensation expense included in cost of revenues
and operating costs and expenses is as follows:

Cost of revenues

$

1,306

$

822

$

4,873

$

4,425

Research and development

3,580

2,414

13,314

9,223

Sales and marketing

1,958

1,725

6,833

7,074

General and administrative

5,947

5,042

22,793

20,436

Total stock-based compensation

$

12,791

$

10,003

$

47,813

$

41,158

(2) Amortization of intangible assets included in costs of revenues
and operating costs and expenses is as follows:

Cost of revenues

$

1,094

$

314

$

3,664

$

1,021

Sales and marketing

120

83

441

276

Total amortization of intangible assets

$

1,214

$

397

$

4,105

$

1,297

(3) Operating costs and expenses for the twelve months ended
December 31, 2017 include the probable insurance recovery of amounts
associated with the previously recognized 2014 wire transaction loss.

MEDIDATA SOLUTIONS, INC.

Reconciliation of GAAP Operating Income and GAAP Net Income to

Non-GAAP Operating Income and Adjusted Non-GAAP Net Income
(Unaudited)

(Amounts in thousands, except per share data)

Three Months Ended December 31,

Twelve Months Ended December 31,

2017

2016

2017

2016

Operating income:

GAAP operating income

$

16,472

$

17,498

$

64,348

$

50,209

GAAP operating margins

11.7

%

14.1

%

11.8

%

10.8

%

Stock-based compensation

12,791

10,003

47,813

41,158

Depreciation and amortization

7,135

4,448

24,053

15,349

Wire transaction recovery (1)

-

-

(4,770

)

-

Contingent consideration adjustment (2)

159

-

319

-

Non-GAAP operating income

$

36,557

$

31,949

$

131,763

$

106,716

Non-GAAP operating margins

25.9

%

25.7

%

24.2

%

23.0

%

Net income:

GAAP net income

$

13,768

$

10,840

$

44,380

$

28,983

Stock-based compensation

12,791

10,003

47,813

41,158

Amortization

1,214

397

4,105

1,297

Wire transaction recovery (1)

-

-

(4,770

)

-

Contingent consideration adjustment (2)

159

-

319

-

Non-cash interest expense (3)

3,762

3,550

14,706

13,914

Tax impact on add-back items (4)

(7,170

)

(5,580

)

(24,869

)

(22,548

)

Adjusted non-GAAP net income

$

24,524

$

19,210

$

81,684

$

62,804

GAAP basic earnings per share

$

0.24

$

0.19

$

0.79

$

0.52

GAAP diluted earnings per share

$

0.23

$

0.19

$

0.74

$

0.51

Adjusted Non-GAAP basic earnings per share

$

0.43

$

0.34

$

1.45

$

1.13

Adjusted Non-GAAP diluted earnings per share

$

0.41

$

0.33

$

1.37

$

1.10

(1) Operating costs and expenses for the twelve months ended
December 31, 2017 include the probable insurance recovery of amounts
associated with the previously recognized 2014 wire transaction
loss. We exclude these amounts for the purposes of calculating
non-GAAP operating income and adjusted non-GAAP net income because
we believe they are not indicative of our continuing operations or
meaningful when comparing current to past results.

(3) Non-cash interest expense includes amortization of debt discount
and issuance costs on our 1.00% convertible senior notes issued in
2013 and amortization of issuance costs on our credit agreement
entered into in 2017. We exclude this incremental non-cash interest
expense for purposes of calculating adjusted non-GAAP net income. We
believe that excluding these expenses from our non-GAAP measures is
useful to investors because such incremental non-cash interest
expense does not generate a cash outflow, nor do the debt issuance
costs represent a cash outflow except in the period of issuance;
therefore both are not indicative of our continuing operations.

(4) Tax impact calculated using a 40% tax rate.

The table above presents a reconciliation of GAAP to non-GAAP
operating income, net income, and net income per share applicable to
common stockholders for the three and twelve months ended December
31, 2017 and 2016. Non-GAAP operating income excludes the impact of
stock-based compensation, depreciation, amortization of intangible
assets associated with acquisitions, wire transaction recovery, and
adjustments to the fair value of contingent consideration. Adjusted
non-GAAP net income excludes the tax-affected impact of stock-based
compensation, amortization of intangible assets associated with
acquisitions, wire transaction recovery, adjustments to the fair
value of contingent consideration, and non-cash interest expense.

MEDIDATA SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in thousands, except per share data)

December 31,

December 31,

2017

2016

ASSETS

Current assets:

Cash and cash equivalents

$

237,325

$

93,519

Marketable securities

246,967

281,285

Accounts receivable, net of allowance for doubtful accounts of
$1,454 and $1,041, respectively

(1) As a result of our early adoption of ASU. No. 2016-18 during the
first quarter of 2017, the consolidated statement of cash flows for
the twelve months ended December 31, 2016 has been adjusted to
include restricted cash in beginning- and end-of-period cash.

MEDIDATA SOLUTIONS, INC.

Reconciliation of Forward-Looking GAAP Operating Income
Guidance and GAAP Net Income Guidance toNon-GAAP
Operating Income Guidance and Adjusted Non-GAAP Net Income
Guidance (Unaudited)

(Amounts in millions)

Estimated Full-Year

2018

GAAP operating income:

$63.5 - $73.5

Stock-based compensation (1)

60.0

Depreciation and amortization (1)

33.0

Contingent consideration adjustment (1)

0.5

Non-GAAP operating income

$157.0 - $167.0

GAAP net income:

$42.0 - $50.0

Stock-based compensation (1)

60.0

Amortization (1)

5.0

Non-cash interest expense (1)

10.0

Contingent consideration adjustment (1)

0.5

Tax impact on add-back items (2)

(19.0)

Adjusted non-GAAP net income

$98.5 - $106.5

(1) Represents the estimated midpoint of our guidance range.

(2) Tax impact estimated using a 25% rate.

MEDIDATA SOLUTIONS, INC.

Anticipated Impact of Transition from ASC 605 to ASC 606

(Unaudited)

(Amounts in thousands, except per share data)

Twelve Months Ended December 31, 2017

Twelve Months Ended December 31, 2016

As Reported Under ASC 605

Anticipated Under ASC 606

Change

As Reported Under ASC 605

Anticipated Under ASC 606

Change

GAAP results:

Revenues

Subscription

$

459,528

$

457,824

$

(1,704

)

$

394,269

$

388,997

$

(5,272

)

Professional services

86,004

86,381

377

69,112

69,496

384

Total revenues

$

545,532

$

544,205

$

(1,327

)

$

463,381

$

458,493

$

(4,888

)

Operating costs and expenses

Sales and marketing

$

126,273

$

124,138

$

(2,135

)

$

109,290

$

105,925

$

(3,365

)

Operating income

$

64,348

$

65,156

$

808

$

50,209

$

48,686

$

(1,523

)

Operating margin

11.8

%

12.0

%

0.2

%

10.8

%

10.6

%

(0.2

)%

Provision for income taxes

$

7,847

$

5,459

$

(2,388

)

$

8,331

$

7,782

$

(549

)

Net income

$

44,380

$

47,576

$

3,196

$

28,983

$

28,009

$

(974

)

Earnings per share

Basic

$

0.79

$

0.84

$

0.05

$

0.52

$

0.50

$

(0.02

)

Diluted

$

0.74

$

0.80

$

0.06

$

0.51

$

0.49

$

(0.02

)

Non-GAAP metrics:

Non-GAAP operating income

$

131,763

$

132,571

$

808

$

106,716

$

105,193

$

(1,523

)

Non-GAAP operating margin

24.2

%

24.4

%

0.2

%

23.0

%

22.9

%

(0.1

)%

Adjusted non-GAAP net income

$

81,684

$

84,880

$

3,196

$

62,804

$

61,830

$

(974

)

Adjusted non-GAAP basic earnings per share

$

1.45

$

1.50

$

0.05

$

1.13

$

1.11

$

0.02

Adjusted non-GAAP diluted earnings per share

$

1.37

$

1.42

$

0.05

$

1.10

$

1.08

$

0.02

The table above presents the anticipated impact of our January
1, 2018 full retrospective adoption of the new revenue guidance in
Accounting Standards Codification ("ASC") 606 on the affected line
items of our consolidated statements of operations for the twelve
months ended December 31, 2017 and 2016. This information is
provided as a supplement to our consolidated statements of
operations to enable investors to understand the relationship
between our historical results as reported under ASC 605 and our
forward-looking guidance under ASC 606.

MEDIDATA SOLUTIONS, INC.

Anticipated Impact of Transition from ASC 605 to ASC 606
(Unaudited)

(Amounts in thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Three Months Ended September 30,

Three Months Ended December 31,

2017

2017

2017

2017

As Reported Under ASC 605

Anticipated Under ASC 606

Change

As Reported Under ASC 605

Anticipated Under ASC 606

Change

As Reported Under ASC 605

Anticipated Under ASC 606

Change

As Reported Under ASC 605

Anticipated Under ASC 606

Change

GAAP results:

Revenues

Subscription

$

107,070

$

107,893

$

823

$

114,291

$

112,904

$

(1,387

)

$

118,411

$

117,271

$

(1,140

)

$

119,756

$

119,756

$

-

Professional services

19,751

19,751

-

23,123

23,123

-

21,669

21,674

5

21,461

21,833

372

Total revenues

$

126,821

$

127,644

$

823

$

137,414

$

136,027

$

(1,387

)

$

140,080

$

138,945

$

(1,135

)

$

141,217

$

141,589

$

372

Operating costs and expenses

Sales and marketing

$

30,109

$

30,226

$

117

$

32,784

$

32,479

$

(305

)

$

31,428

$

29,996

$

(1,432

)

$

31,952

$

31,437

$

(515

)

Operating income

$

12,173

$

12,879

$

706

$

13,743

$

12,661

$

(1,082

)

$

21,960

$

22,257

$

297

$

16,472

$

17,359

$

887

Operating margin

9.6

%

10.1

%

0.5

%

10.0

%

9.3

%

(0.7

)%

15.7

%

16.0

%

0.3

%

11.7

%

12.3

%

0.6

%

Provision for income taxes

$

(501

)

$

(257

)

$

244

$

2,438

$

2,065

$

(373

)

$

6,233

$

6,331

$

98

$

(323

)

$

(2,680

)

$

(2,357

)

Net income

$

9,518

$

9,980

$

462

$

8,250

$

7,541

$

(709

)

$

12,844

$

13,043

$

199

$

13,768

$

17,012

$

3,244

Earnings per share

Basic

$

0.17

$

0.18

$

0.01

$

0.15

$

0.13

$

(0.02

)

$

0.23

$

0.23

$

-

$

0.24

$

0.30

$

0.06

Diluted

$

0.16

$

0.17

$

0.01

$

0.14

$

0.13

$

(0.01

)

$

0.21

$

0.22

$

0.01

$

0.23

$

0.28

$

0.05

Non-GAAP metrics:

Non-GAAP operating income

$

26,970

$

27,676

$

706

$

32,082

$

31,000

$

(1,082

)

$

36,154

$

36,451

$

297

$

36,557

$

37,444

$

887

Non-GAAP operating margin

21.3

%

21.7

%

0.4

%

23.3

%

22.8

%

(0.5

)%

25.8

%

26.2

%

0.4

%

25.9

%

26.4

%

0.5

%

Adjusted non-GAAP net income

$

18,192

$

18,654

$

462

$

18,773

$

18,064

$

(709

)

$

20,195

$

20,394

$

199

$

24,524

$

27,768

$

3,244

Adjusted non-GAAP basic earnings per share

$

0.32

$

0.33

$

0.01

$

0.33

$

0.32

$

(0.01

)

$

0.36

$

0.36

$

-

$

0.43

$

0.49

$

0.06

Adjusted non-GAAP diluted earnings per share

$

0.31

$

0.32

$

0.01

$

0.31

$

0.30

$

(0.01

)

$

0.33

$

0.34

$

0.01

$

0.41

$

0.46

$

0.05

The table above presents the anticipated impact of our January
1, 2018 full retrospective adoption of the new revenue guidance in
ASC 606 on the affected line items of our consolidated statements
of operations for the three-month periods ended March 31, 2017;
June 30, 2017; September 30, 2017; and December 31, 2017. This
information is provided as a supplement to our consolidated
statements of operations to enable investors to understand the
relationship between our historical results as reported under ASC
605 and our forward-looking guidance under ASC 606.

MEDIDATA SOLUTIONS, INC.

Anticipated Impact of Transition from ASC 605 to ASC 606
(Unaudited)

(Amounts in thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Three Months Ended September 30,

Three Months Ended December 31,

2016

2016

2016

2016

As Reported Under ASC 605

Anticipated Under ASC 606

Change

As Reported Under ASC 605

Anticipated Under ASC 606

Change

As Reported Under ASC 605

Anticipated Under ASC 606

Change

As Reported Under ASC 605

Anticipated Under ASC 606

Change

GAAP results:

Revenues

Subscription

$

89,968

$

91,223

$

1,255

$

96,760

$

96,333

$

(427

)

$

101,560

$

100,462

$

(1,098

)

$

105,981

$

100,979

$

(5,002

)

Professional services

14,270

14,270

-

17,850

17,935

85

18,501

18,501

-

18,491

18,790

299

Total revenues

$

104,238

$

105,493

$

1,255

$

114,610

$

114,268

$

(342

)

$

120,061

$

118,963

$

(1,098

)

$

124,472

$

119,769

$

(4,703

)

Operating costs and expenses

Sales and marketing

$

25,458

$

24,489

$

(969

)

$

27,609

$

26,121

$

(1,488

)

$

27,789

$

25,977

$

(1,812

)

$

28,434

$

29,338

$

904

Operating income

$

6,638

$

8,862

$

2,224

$

11,146

$

12,292

$

1,146

$

14,927

$

15,641

$

714

$

17,498

$

11,891

$

(5,607

)

Operating margin

6.4

%

8.4

%

2.0

%

9.7

%

10.8

%

1.1

%

12.4

%

13.1

%

0.7

%

14.1

%

9.9

%

(4.2

)%

Provision for income taxes

$

(1,196

)

$

(141

)

$

1,055

$

1,688

$

2,235

$

547

$

4,347

$

4,866

$

519

$

3,492

$

822

$

(2,670

)

Net income

$

4,575

$

5,744

$

1,169

$

6,210

$

6,809

$

599

$

7,358

$

7,553

$

195

$

10,840

$

7,903

$

(2,937

)

Earnings per share

Basic

$

0.08

$

0.10

$

0.02

$

0.11

$

0.12

$

0.01

$

0.13

$

0.14

$

0.01

$

0.19

$

0.14

$

(0.05

)

Diluted

$

0.08

$

0.10

$

0.02

$

0.11

$

0.12

$

0.01

$

0.13

$

0.13

$

-

$

0.19

$

0.14

$

(0.05

)

Non-GAAP metrics:

Non-GAAP operating income

$

20,105

$

22,329

$

2,224

$

25,359

$

26,505

$

1,146

$

29,303

$

30,017

$

714

$

31,949

$

26,342

$

(5,607

)

Non-GAAP operating margin

19.3

%

21.2

%

1.9

%

22.1

%

23.2

%

1.1

%

24.4

%

25.2

%

0.8

%

25.7

%

22.0

%

(3.7

)%

Adjusted non-GAAP net income

$

12,832

$

14,001

$

1,169

$

14,790

$

15,389

$

599

$

15,972

$

16,167

$

195

$

19,210

$

16,273

$

(2,937

)

Adjusted non-GAAP basic earnings per share

$

0.23

$

0.25

$

0.02

$

0.27

$

0.28

$

0.01

$

0.29

$

0.29

$

-

$

0.34

$

0.29

$

(0.05

)

Adjusted non-GAAP diluted earnings per share

$

0.23

$

0.25

$

0.02

$

0.26

$

0.27

$

0.01

$

0.28

$

0.28

$

-

$

0.33

$

0.28

$

(0.05

)

The table above presents the anticipated impact of our January
1, 2018 full retrospective adoption of the new revenue guidance in
ASC 606 on the affected line items of our consolidated statements
of operations for the three-month periods ended March 31, 2016;
June 30, 2016; September 30, 2016; and December 31, 2016. This
information is provided as a supplement to our consolidated
statements of operations to enable investors to understand the
relationship between our historical results as reported under ASC
605 and our forward-looking guidance under ASC 606.